Tuesday, June 27, 2017

***Rebelde Mark
1
This is hardly a secret: over the years, I have received quite a few
requests for a 'slightly different' rebelde. Basically, there is a quite a
lot of demand for a watch with the case size of around 40mm. Also, a
number of subscribers have expressed interest in a self-winding timepiece
(automatic watch). The third request: all-Roman numeral dial, or
alternatively, Arabic numerals only, but not the mix. There are
a number of reasons why such models are still on the drawing board. The
most obvious: the inability to source a quality, high-grade custom-finish
Swiss mechanism. The good news is that I have finally managed to find a
Swiss maker who can supply a movement of the specifications I was looking
for. Moreover, the minimum order quantity can be as low as 200 pieces which
would be just perfect for a two 75-piece run (with 50 movements to be kept
in stock for spare parts). I am yet to settle on the details, but in
general, the watch case will look similar to IWC Mark 16 or Mark 17: a
cross-over between a sport and dress piece, perfectly suitable for a medium
size wrist. The Swiss movement maker is reputable and
reliable and has been in business for decades. Like with previous movements
we got from Switzerland, our new 'for rebelde' movement will have a
custom finish, a very special auto rotor (with the rebelde logo and star)
and blue screws, lending itself for a case with a see-through case back.
There is also a possibility to have two variations: one with a central
sweep seconds hand and one with small seconds at 6 o’clock. I am
really keen on the latter; the small hands will make a nice connection to
the existing rebelde models. So last week I formally placed my
order for the movements. The delivery time is around 6 months. Of course,
the work on the case design, dial and hands will commence once the sample
movement arrives. Realistically, if all goes as planned and, assuming no
major delays, the first 'rebelde auto' will be assembled in July 2018.
To say that I am excited would be an understatement. Having two
new models would be a huge step forward. Of course, both the stainless
steel 44mm and titanium 45mm models will remain in production - my
production philosophy is simple: to keep producing small batches / limited
quantity of both Pilots and Control Tower for years to come. It would be
silly to discontinue a model which is well-made, robust, repairable and
waterproof. Probably the most exciting bit about the
rebelde auto: the retail price is expected to be $2,500. This would
make it less than half price of a similar IWC watch, yet the quality of the
mechanism and the case will be as good as IWC. Stay tuned for
more - and if you have a suggestion feel free to email. Unfortunately, at
this stage, I am not ready to take any orders so you will have to hold your
horses until at least early 2018. As always, this project is only
possible thanks to your loyal support, for which I thank you.

Monday, June 26, 2017

After spending a week in Geneva, I am now heading north towards
Neuchâtel and La Chaux-de-Fonds; regions that specialise in the production
of just a handful of components, supplying the 'brand names'. While the watch
industry is the core, finely-machined components are supplied to the medical,
electronic and military industries as well.

So what makes the Swissswiss?
Apart from the obvious - the know-how and super precision equipment - it is the
tradition, persistence and unique mindset that makes the Swiss business model
so resilient, practically with no competition.

The business model has been unchanged for hundreds of years: from father to
son. The small factories are passed on - and with them, the capital, knowledge
and connections. But 'passed on' does not mean mere inheritance. Rather, the
sons are expected to purchase the business from their fathers, then work hard
to pay off the loan while continuing to invest in new technologies. Taking into
account that the 'product' must remain price competitive, this is a huge
challenge for the new generation. But the kids are doing fine - and so far I
have met at least a dozen businesses where I am dealing with 20 or 30-something
CEOs who are 'on fire'. Yes, the fathers and grandfathers are quietly watching
from a distance, keeping an eye on the deals and transactions but the 'next
generation' of Swiss entrepreneurs are firmly seated and in charge.

"Established"
is the key word. To be taken seriously and considered as a potential customer,
I am expected to be established and have a proven track record. My introduction
is brief, and to the point: "a third-generation watch repairer, and the
owner of the smallest watch brand in the world with 660 watches sold, all
working." "Is this your watch?” - is the first question I am asked.
And without exception, it is the rebelde watch itself that opens the doors.
Humble, but obviously robust, traditional yet raw. "So which components do
you actually make?" is the second question.
"At this stage, cylindrical components under the radius of 4mm, however we
will be soon making the main plates and bridges. This year we intend to
acquire a gear hobbing machine and pivot burnisher, and this is why I am
here."

The mention of these
two highly specialized pieces of equipment often results in a rather puzzled
look. "Wouldn't be easier to subcontract those operations to wheel
specialists?" And from then on, I go on to explain in length that there
are no watch gear-cutting specialists in Sydney, nor in Australia. Actually, we
are the only watchmakers in Australia trying to make movement components and
our journey to our own in-house movement will be long, unpredictable and bumpy.
But we are determined and we will get there, sooner or later.

I am sure that some of my subscribers will question next my statement, but I am
taking the risk of being misunderstood:
‘Swiss made’ is so easy - if you are in Switzerland. There are countless
numbers of specialists who will be more than happy to manufacture any component
you want or need, even in a quantity of one. If I were to relocate to Geneva, I
would have my own designed "Swiss Made" watch movement in less than
12 months. But “Made in Australia” is extremely difficult. Not only because of
the enormous financial commitment, but because we are attempting something that
is next to impossible. We are pioneering an entire micro industry in our own
backyard. And this realization is unbearably painful. Making watches in
Australia is more difficult than breeding kangaroos at the top of the Mont
Blanc. The challenge which borders on the insane, a useless task destined
to fail.

At the same time, and for that very same reason, even the little that we
manufacture right now is truly very special and impressive; probably more so to
the Swiss than Aussies. But our time is yet to come...

I will leave you now with just two mind-bending thoughts: I have met a
Swiss spring-maker who manufactures one type of spring. He is so
sub-specialized that one of his machines has been making that very same spring
for 13 years, 24 hours per day, seven days per week. One spring, one machine,
13 years, non-stop.

The second case: I
meet the20-something CEO of a stem-making company. After learning that we have
a CNC machine capable of full industrial production, he asked how many watch
stems I make. A dozen a day, if that, I told him. Which material do I use?
Stainless steel, 316L. "Fine", he said. "We make 1,200,000 stems
per month and sell them for 17 cents apiece.” “This is crazy,” - I replied –
“the cost of the material alone is twice that much! How can a Swiss-made stem
be cheaper than one made in China?" He laughed - his family has been
making watch stems for over 70 years, they have hundreds of stem making
machines ranging from the old manual and CAM machines to the latest CNC ones,
all working, all paid off. They are using the steel they have had in stock
since the watch manufacturing crisis of the 70s. And yes, more than half of
their output goes to China – because the Chinese are happy to pay less for
more.

The best way to describe my Swiss trip would be a roller-coaster ride. And I am
yet to share with you some of the truly life changing encounters.
Stay tuned!
Nick

Thursday, June 8, 2017

This is hardly a surprise: manufacturing contributes just 7 percent of Australian gross domestic products. What is scary is this: manufacturing has shrunk 20% since 2015. While as a nation and as individuals we are still amongst the 12 wealthiest nations in the world, the wealth comes from services, not from making physical goods. Even mining contributes just 9% of our GDP.

Unless the trend is reversed, the consequences will be tragic: we are raising a generation of smart kids waiting for their inheritance, yet kids who possess no product-making skills.For a nation to grow healthy, a good balance of manufacturing, servicing, mining and yes, even agricultural activities, is essential.

What are the reasons for the decline in Australian manufacturing? I am not an expert in this field, so instead of offering my 'rebellious leftist socialist' opinion, let me quote the Australian industry experts:

"The reasons for the long-term decline of manufacturing in Australia are many. Particularly significant is a long-standing policy indifference to the manufacturing sector, bordering on hostility from central economic agencies such as the Treasury, the Reserve Bank and the Productivity Commission. This flows from a colonial cringe, the commitment to a neoliberal 'free market' ideology and continued adherence to the orthodox economic doctrine of 'comparative advantage' - the belief that a nation should produce only those things for which it has a 'natural' or innate advantage over other countries."

Again, this is scary. The snowball is melting and regardless of which side you take, and how you see the future of Australia, you should be concerned. Because without people who know how to actually MAKE things, we would not be able to technically advance. We will not be able to stop the boats, build submarines, or hospitals, or do advanced research, or combat climate change - not even fix broken bones. We must re-learn how to shape metals or we will remain colonized, and soon become a foreign-owned and foreign run nation.

Yesterday, Josh and I spent all day visiting metal merchants and machining shop suppliers. To say that we are disappointed would be an understatement. The snowball is melting fast: after the closure of automotive industry manufacturing plants, it is obvious that demand for precision machining is no longer there. Almost 100% of hand tools, measuring equipment, lathes, mills and accessories are cheap Chinese imports. The product range would hardly satisfy the needs of an advanced machining shop which specializes in the repair of large field machinery. The hobbyists are gone too. Your typical Englishman looking for a strip of brass or a small diameter rod for his clock or steam model engine is dead and buried, and his Myford lathe is either exported to China or rusting fast in his garage. His son is a well-to-do banker or an accountant or a business consultant and he has no interest in his dad's lathe. Yet just a bunch of old hobbyists would generate enough of a 'butterfly effect' to keep the steel merchants interested in offering small cuts and off-cuts, so dearly important for prototyping.

Sandvik, the world largest special-metal and cutting tool supplier has basically closed its Australian office. While their website still lists a Smithfield-based business as its sales representative, this is just an error, to be fixed with their next website update. And who can blame them? Why bother doing business with a colony on the other side of the world?

Last night Josh spent a good half an hour talking to a sales representative of a German precision instrument maker, based in Australia and specializing in mills. In the ten years since he started promoting the high-end machine, he has failed to sell even ONE single unit. At one stage, he thought that he finally made a sale but after 4 years dealing with one Australian Government-owned business, the sale contract failed.

Now, we are not talking about a mega million dollars investment: the machine is no more expensive than a high performance sports car. But ten years without a sale is a long time to be patient, even for a German salesman. I can only imagine how many German machines he could have sold if he was based in China, Russia, Brazil - or even Indonesia; in countries where people actually makethings.

The butterfly effect - a sale of just one high precision machine to a Government-run plant would mean the whole world of difference. Once the machine arrives, we would have a whole bunch of Australians trained to use it; and a few more who would learn how to maintain it. There would be an immediate requirement for exotic materials and very specialist tools which would attract the attention of Australian tool and material suppliers. Once the machine was set up and production commenced, it would become a talking point and would attract media attention. It would then attract the attention of small private businesses. A few more machines would be imported and businesses would be able to share their know-how, innovate and improve, and offer a high-tech product for both the domestic and export markets.

The road ahead of us is bumpy and unpredictable. We have fastened our seatbelts and so should you.